TY - JOUR
T1 - A Rudimentary Random-Matching Model with Divisible Money and Prices
AU - Green, Edward J.
AU - Zhou, Ruilin
N1 - Funding Information:
* This paper was written while Ed Green was BP Visiting Professor at the London School of Economics. We thank Dean Corbae, Juan Renero, Helene Rey, and Warren Weber for helpful comments on an earlier draft. Zhou’s research received support from the Research Foundation and the Institute of Economic Research of the University of Pennsylvania. Green’s research received support from the U.S. National Science Foundation. The views expressed in this paper are those of the authors and do not necessarily reflect those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System.
PY - 1998/8
Y1 - 1998/8
N2 - We consider a version of Kiyotaki and Wright's monetary search model in which agents can hold arbitrary amounts of divisible money. A continuum of stationary equilibria, indexed by the aggregate real money stock, exists with all trading occurring at a single price. There is always a maximum level of the real money stock consistent with existence of such an equilibrium. In the limit as trading becomes faster relative to discounting, any real money stock becomes feasible in such an equilibrium. In contrast to the original Kiyotaki-Wright model, higher equilibrium real money stocks unambiguously correspond to higher welfare in this costless-production environment.Journal of Economic LiteratureClassification Numbers: D51, E40.
AB - We consider a version of Kiyotaki and Wright's monetary search model in which agents can hold arbitrary amounts of divisible money. A continuum of stationary equilibria, indexed by the aggregate real money stock, exists with all trading occurring at a single price. There is always a maximum level of the real money stock consistent with existence of such an equilibrium. In the limit as trading becomes faster relative to discounting, any real money stock becomes feasible in such an equilibrium. In contrast to the original Kiyotaki-Wright model, higher equilibrium real money stocks unambiguously correspond to higher welfare in this costless-production environment.Journal of Economic LiteratureClassification Numbers: D51, E40.
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U2 - 10.1006/jeth.1997.2356
DO - 10.1006/jeth.1997.2356
M3 - Article
AN - SCOPUS:0003175062
SN - 0022-0531
VL - 81
SP - 252
EP - 271
JO - Journal of Economic Theory
JF - Journal of Economic Theory
IS - 2
ER -